7. Redesigned Computers has 6.5 percent coupon bonds outstanding with a current

Question

7.

Redesigned Computers has 6.5 percent coupon bonds outstanding with a current market price of $742. The yield to maturity is 13.2 percent and the face value is $1,000. Interest is paid annually. How many years is it until these bonds mature?

A.

5.73 years

B.

4.19 years

C.

7.41 years

D.

6.16 years

E.

8.32 years

Redesigned Computers has 6.5 percent coupon bonds outstanding with a current market price of $742. The yield to maturity is 13.2 percent and the face value is $1,000. Interest is paid annually. How many years is it until these bonds mature?

Explanation / Answer

Answer A = 5.73 years

Face Value(FV) $1,000 Coupon Rate 6.50% Coupon payment (PMT) (1000 x 6.5%) $65 Present value (PV) $742 Yield to Maturity (Rate) 13.20% Years to maturity(Nper)(Rate,PMT,PV,FV);NPER(13.20%,65,-742,1000) 5.73

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